EZ Energy to Acquire 42 Stores

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EZ Energy to Acquire 42 Stores

By Barbara Grondin Francella

MANSFIELD, Ohio -- EZ Energy USA Inc. signed a contract to buy a group of 42 gas stations and four lots for $32.6 million, plus inventory.

While the company's deputy chairman would not discuss the particulars of the deal, including where the stores are located, until the acquisition closes in the first quarter of 2009, Oren Zahavi told CSNews Online the company "is looking to expand, even in these economic times. We think it is a good time to be a buyer, even if it is hard to find financing."

On that front, Investec Bank (U.K.) Ltd. and a private investor are investing $10 million in the c-store/petroleum marketer. The companies will initially invest $7 million in EZ Energy for a 27-percent stake in the company. Later, the companies will invest an additional $3 million for a 7.6-percent stake.

"We think this new partnership will make it easier for us to obtain financing going forward," Zahavi said. "We are looking at other acquisitions now, as we always are. It is a difficult time, but we look at it as an opportunity as we look to grow.

"It's a good time to buy quality assets," he continued. "It's a less competitive environment, with other companies sitting on the fence, rather than jumping in and making acquisitions. Multiples have gone down a little bit. Some of our competitors [for making acquisitions] are finding it difficult to follow their past strategy of taking on a large number of sites and then flipping them to dealers, just to remain the jobber. The dealers are having their own difficulties now."

The petroleum wholesaler and distributor is not eager to turn company-operated stores into dealer stores, Zahavi said. "We have a two-pronged approach, operating stores directly and having dealers. I think that makes us more competitive in acquisitions."

When the deal is closed, EZ Energy will own 93 gas stations and convenience stores. EZ Energy's retail stations sell 160 million gallons of gasoline a year. The c-stores generate sales of $68 million a year, Zahavi confirmed.